Donors’ Money Misused: Are World Bank/NGOs Responsible?

Every country holds the theory that collecting taxes (USA), borrowing money (Ghana), sharing profits of natural resources (China), or receiving donors’ money (Liberia) is the democratic process of acquiring resources to finance expenditure-funding security, funding education, funding infrastructure, etc. And, if a government is to secure adequate money for these programs, then, even an official or aspirant, “whose heart is swollen with love for his country,” must not only pay attention, but should also become vigilant to obtain and, or protect, for example, philanthropists’ money donated to make up the shortfalls in governments’ revenue.

It is necessary to protect donations because those self-proclaimed honest, transparent, or professionals called non-governmental agencies (NGOs) who spend philanthropists’ money are not accountable to the voters. Also, some NGOs do view donations as an employment opportunity or cash cows. Further, I surmise that the interest of the World Bank to earn profits from lending money makes it difficult for the Bank to encourage a success story of NGOs projects.

These factors and others have and continue to increase the number of victims, who are in need of donations. One of those communities is Peshawar of Pakistan. A $300 million law suit in Pakistan is filed against an NGO called Academy for Educational Development, reported in the NY Times, 9/15/15. The reporter indicated that this $300 million lawsuit is an example of many other cases, explaining why Pakistan has not benefited from the $7.5 billion donated by the US Congress for nonmilitary assistance.

Also, another NY Times reported that NGOs did misuse a significant portion of the $5.4 billion donated to Haiti after an earthquake destroyed infrastructure, etc. Interestingly, the management of the Haiti Relief Commission was under the Commission headed by William Jefferson Clinton, former President of the United States. In Liberia, the stories of NGOs squandering development grants are countless. And Dr. Abdoulaye W. Dukule, commenting on whether Liberia would benefit from the $520 million dollar pledged for Liberia stated that Liberia would receive about $100 million out of the $520 million. This is because public studies do show that only 20% of donated funds impact the intended target. (www.theperspective.org, March 4, 2004).

Dr. Dukule was not alone in pointing out how contractors/NGOs misuse donations for poor countries. Mr. Clair MacDougall of America Aljazeera quoting a 2010 study of the $200 million (part of the $520 million pledged for Liberia) awarded to DynCorp to train 2,000 Liberian soldiers stated this: “…DynCorp’s military training program failed to train the Liberians in “basic infantry skills, such as the proper use of security patrols, noise and light discipline” and other techniques…DynCorp purchased the wrong types of equipment and spent too much on subcontractors’ salaries, at the expense of training on international law and other programs…” (www.America.aljazeera.com)

Spending a significant amount of donations on administrative costs was also found at UNICEF (United Nations Children Emergency Fund). The 2012 and 2013 Annual Report of Liberia Health Sector POOL Fund indicated how UNICEF allocated a significant portion of the $64 million funds for administrative cost. The costs included the following: 1) bank charges 2) UNICEF’s pass-through fees; 3) cost of Pool management; 4) cost to hire a management firm; and 5) Staff members include: a) Pool fund manager; b) two fund advisers; c) two project accountants; d) an administrator; e) an operating officer and f) drivers. (www.poolsecretariat2013@gmail.com). Why would a fiduciary organization employ five (5) managers just to monitor since the NGOs such as Merlin, CTH, etc. had their own administrative costs?

A non-governmental organization (NGO), which came into existence to replace corrupt government bureaucrats, is neither a part of a government nor a conventional for-profit business. It may have charitable status, while others may be registered for tax exemption based on recognition of social purposes. NGOs are audited, but they are not accountable to the voters.
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Wait a minute, if donation does not only make up for the shortfalls in revenue, but also reduces the need to borrow more money from the World Bank, why are bureaucrats or presidential candidates tight lipped over the misuse of charities? Most importantly, why should the World Bank, the economic adviser to many of these developing countries, be silent? Is the Bank silent because the success of NGOs’ might reduce the need to borrow money from the World Bank, thereby, decreasing World Bank’s profits from loans made to countries? Or is there any business interest between NGOs and the Bank that might have created an environment for the Bank to coopt NGOs?

Mr. Ibrahim F. I. Shihata of Cornel International says yes. In his article called “The World Bank and NGOs he explained how the Bank and NGOs interact. He stated that beginning 1981, “…the Bank has employed NGO representatives, under normal Bank guidelines for the hiring of consultants, as well as engaging NGOs as contractors to carry out activities under pre-investment studies financed by the United Nations Development Programme (UNDP). When the Bank does engage an NGO, the Bank enters into an appropriate agreement with the NGO and the NGO works directly for the Bank to support its staff…” Further, since 1991, “…the Bank invites NGOs to many international conferences and meetings…”

Although NGOs do not perform projects for profits, but excessive salaries do not leave behind adequate donations for the intended projects. More so, auditing financial records of NGOs has not helped NGOs to wisely use donors' money. And if NGOs follow the “Cooking the Book” method or false accounting method, used by many companies, says Gretchen Morgenson, then bureaucrats, aspirants as well as voters, must pay attention to donors' money.

Voters shouldn’t elect aspirants who are silent or are in the pockets of these institutions, especially those who have working relationships with the World Bank as well as NGOs. Also, ask an aspirant about the activities of the Bank/NGOs, and you might determine if he/she is in the pocket of the Bank. To launch this new advocacy, let us begin to focus on the recent grants of $257 million the United States awarded to Liberia on November 2, 2015.